Endless Innovation

Darwin's Finches and Corporate Innovation

So many business terms that we take for granted - like "survival of the fittest" - are actually based on Charles Darwin's seminal work on the ways that species adapt to their environment in the wild -- and the way these adaptations are handed down to their progeny. So it's always fun when other innovation bloggers combine smart thinking about corporate innovation with insights about Darwinian evolution. Here, Michael E. Driscoll of Dataspora asks What Can Darwin's Finches Tell Us About the Downturn?

"Newspaper articles paint the markets in metaphors like “difficult climate” and “harsh landscape” –but these clichéd phrases have a kernel of truth. Thinking about markets as natural environments reveals that selective forces are at work. But it also predicts when they work.  In the natural world, as the story of Darwin’s finches tells us, selection acts in times of crisis:  drought, famine, and disease.  For our markets, that time is now."

As Driscoll points out, companies can learn a lot about how to survive the current downturn by looking to the example of Darwin's finches on the Galapagos Islands. During the wet seasons, it was hard to see how a finch’s beak made any difference to its fitness. However, when the rainy season brought no rain, they found that drought became the determining factor that shaped the survivors of the species: 

“They found fewer than two hundred finches alive on the island. Just one finch in seven had made it through the drought… The average beak before the drought was 10.68 millimeters long and 9.42 deep. The average beak of the fortis that survived was 11.07 millimeters long and 9.96 deep… The birds were not simply magnified by the drought: they were reformed and revised. They were changed by their dead. Their beaks were carved by their losses.”

In the same way, the benefits of having the right innovation processes in place are often masked during good times. "Firms with both new and old technologies remain solidly profitable, happily hopping along... But when hard times hit, innovators survive. More importantly, they flourish when the business cycle swings up again... But like Darwin’s finches, the survivors are not just those who have more technology investments, but those who get the dimensions right." At the end of the day, downturns are not only good for innovation, they are necessary. 

[images: Darwin's Finches via Calgary Public Library]

Digital Darwinism: The New Marketing and Media Ecosystem

In the current issue of strategy + business magazine, Christopher Vollmer, a partner with Booz & Company in New York City, comments on the "digital Darwinism" that is reshaping the world of media and marketing:

"An ecosystem is an appropriate metaphor for today’s marketing environment. It is a dynamic, complex, and interconnected community in which marketers, advertising agencies, and media companies depend on one another, to a certain extent, to survive and thrive. But it is also a brutal, competitive arena, where a kind of “digital Darwinism,” or survival of the fittest, holds sway, rapidly distinguishing winners from losers. Companies that possess certain preferred traits in their organizational DNA or that have superior skills of self-adaptation are positioned to flourish in this ecosystem. Those without either face almost certain extinction.

The marketing and media ecosystem has arrived at an evolutionary threshold. Old structures and ways of working persist but are fundamentally challenged by newer, more dynamic, more innovative alternatives. Numerous developments have brought the industry to this transition point. Consumers have more control and choice. Their media usage has fragmented. Many more advertising platforms exist. And marketers are insisting on greater precision in targeting and accounting for their ad spend.

The recent economic turmoil only accelerates this evolutionary transition. Companies across the ecosystem have to acquire or develop three dominant traits to survive: relevance, interactivity, and accountability."

According to Vollmer, companies adapting well to this new environment include Dell, Nike, HP and P&G. The Marketing & Media Ecosystem 2010 study is available as a free PDF download on the Booz & Co. site.

Webby Awards: FutureLab and TradeKing

With Internet Week in New York culminating tonight with the presentation of the 12th Annual Webby Awards to the most innovative websites in the world, it's the time of the year when people talk about unique and innovative websites. For me, it has been a chance to reflect on how fortunate I am to be contributing to two amazing sites that have been recognized by the awards panel as being best in class.

Within the Financial Services category, the TradeKing Community was selected as an Official Honoree. Within the Business Blog category, the Futurelab Marketing & Strategy Innovation Blog was one of the five official nominees, losing by a razor-thin margin to the FT.com Alphaville blog.

A big hat tip to the folks at TradeKing and Futurelab!

The sorta-highly evolved executive

Given this blog's focus on business evolution and the DNA of innovation, I couldn't resist this: Oliver the Humanzee. Recently featured on the Paranormal Insider blog, Oliver was a sort of chimp-human hybrid that never quite evolved the way he was supposed to:

"Oliver was odd for a chimpanzee. He looked different than most other apes, with his hairless face, light eyes, and a tendency to walk upright. According to the Burgers, he preferred the company of humans to that of his fellow apes; he enjoyed drinking beer and watching television with them, and would occasionally help out with chores around the house. With the Burgers, Oliver made appearances on the Ed Sullivan Show and at Radio City Music Hall. Unfortunately, Oliver was attracted to human females, and had to be sold when he became a threat to Janet Burger..."

Methinks Oliver the Humanzee might just be an apt metaphor for the type of business executive that tries to evolve -- but just can't seem to make it to the next step. Instead, he (or she!) sits around, drinks beer with the troops, occasionally helps out, but mainly just causes all sorts of problems for the business organization. Eventually, he or she is upsized, rightsized, or outsourced away.

[image: Oliver the Humanzee]

Thinking in terms of business ecosystems

This thought-provoking cartoon, distributed by the Universal Press Syndicate, is called Unclestiltskin. What happens to America when we deplete all of our natural resources and realize that we've squandered away our long-term future in favor of short-term profits? If you're a company like Halliburton, of course, the answer is simple: you just move to Dubai and continue business as usual. For other companies, the answer is likely to be much more complex.

Which leads to a digression of sorts from "natural ecosystems" mentioned in the editorial cartoon to "business ecosystems." Companies need to realize that they function as part of a living, breathing business ecosystem, and that the elimination of even a single participant in this ecosystem can have serious consequences.

A recent Toyota Motor Company feature in FORTUNE magazine ("America's Best Car Company") really highlights this point. A Toyota executive explains that the company is doing everything possible to ensure that Detroit's Big Three (Ford, GM, Chrysler) continue to survive within the automotive ecosystem, even as Toyota continues to gain market share in the U.S. If, say, Ford turns belly-up, Toyota knows that it will be facing the mother of all corporate backlashes in the USA:

"We understand that as Toyota's presence increases, expectations and demands will also rise," president Katsuaki Watanabe told Fortune. Nuances will matter more than ever. When then-chairman Hiroshi Okuda in 2005 said Toyota might raise prices to take pressure off GM, the perceived condescension sparked outrage, followed by furious backpedaling. Okuda's remark betrayed Toyota's biggest fear: the financial collapse of one of the Detroit Three. Jim Lentz tries his best to deflect such talk. "We're all in this together," he says of his U.S. rivals. "We wish them the best."

If Toyota cares so much, why is it entering Detroit's last bastion of comparative strength? But Lentz swears that he means it and that the Tundra is simply a way to offer consumers a choice. The status quo, as he needn't point out, has served Toyota well. Despite occasional Japan bashing, Toyota has been able to grow. This process that has been gradual enough that the company is now an accepted - in fact, admired - part of the U.S. landscape. The dramatic failure of any of the Detroit Three would destabilize the industry - and make Toyota the villain. "The most important management task at Toyota these days," says auto consultant Jim Womack, "is to manage the decline of the domestics."

[image: Unclestiltskin]

The Innovation Ecosystem blog analyzes Brand Evolution

With much of the mainstream business media focusing on rapid, revolutionary change, it's always a treat to discover bloggers and consultants who adopt more of an evolutionary view of business innovation. For example, Julie Fleischer, the Innovation Thought Leader for Egg Strategy, has been publishing a blog since December 2006 called Innovation Ecosystem that looks at how concepts related to evolution and ecosystems can be used to understand business strategy and marketing. As Julie explains at the top of her Innovation Ecosystem blog, "great innovation happens organically, with sloppy edges and growth spurts. Because as with nature, innovation doesn't take place in a vacuum - it is dependent upon and interrelated to all things around it. And because innovation needs to be cognizant of the ripple effect -- seeing opportunities AND managing potential damage. Innovation thrives on change, curiosity, and desire."

For example, citing a recent cover story in Newsweek ("The Evolution Revolution"), Julie points out what evolution means for corporate brands:

"The cover story of the 3.19 issue of Newsweek is fascinating... We're now learning that evolution is not a straight-lined path of progress. It occurs in fits and starts, with many adaptations failing to take root. We're discovering an evolutionary family tree of sorts, with a number of adaptive traits developing, hanging around for several million years or so, and then becoming extinct. Progress is lumpy.

And that's where brands come in.  Brand evolution is rarely a straight line path of forward progress. Quite often, brand adaptations (let's call them line extensions or flankers) come to market, score sufficient volume to hang around for several years, and then make way for a new generation of extensions. This process may continue on ad infinitum without ever really evolving the brand - making it more relevant, more contemporary, competitively advantaged.

Survival of the fittest is about more than merely hanging in there.

For a brand to truly evolve, it needs to move beyond these experiments and take a strategic view toward innovation of the entire ecosystem. Perhaps the business model needs to evolve (see Netflix vs. Blockbuster below). Perhaps the brand needs a different approach regarding channels or supply chain. Maybe the consumer situation (the human genomic code?) has changed and new needs have arisen, requiring repositioning or structural packaging innovation. Maybe a new predator has emerged that forces the brand to take a more defensive - or offensive - posture. Just as our species need to evolve, so do our brands.  Settling for "natural growth" only gets you so far - hyperadaptation of the innovation ecosystem is needed to grow the legs that take you out of the swamp."

[image: Newsweek]

2007: An innovation odyssey

Do you ever see corporations doing innovative things they shouldn't, theoretically, be doing? Usually, it starts with an employee in the front ranks, changing the way he or she interacts with customers. From there, the practice can spread throughout the organization. Customers and partners immediately wonder if it's just some kind of glitch - or whether it's one of those serendipitous changes that will soon become hard-wired into the company's DNA.

Anyway, the same types of things happen in nature all the time. The Associated Press, for example, recently carried a tale of chimpanzees that use spears to hunt small animals -- something they simply aren't supposed to be doing:

"Researchers have witnessed a chimpanzee skewering a lemur-like creature for supper, but it's unclear whether the spectacle was a bit of luck or an indication that chimps have a more advanced ability to hunt than was thought. A team led by Iowa State University anthropology professor Jill Pruetz witnessed the spearing of a bushbaby in Fongoli, Senegal, during an observation of chimpanzees from March 2005 to July 2006.

In a study being released in the online version of the journal Current Biology, Pruetz documents 22 cases of chimps using spear-like tools to hunt bushbabies — a small primate that lives in hollow branches or tree trunks. "It's not uncommon to have chimps use tools. But to use them in the context of hunting" is nearly unheard of, she said."

Anyway, this story of the chimpanzees who hunt reminds me of the opening scenes of Stanley Kubrick's movie "2001: A Space Odyssey," in which a giant ape-like creature at the Dawn of Man discovers that the giant bones of the woolly mammoth can become a hunting instrument. As Kubrick hints, it's only one small step from using a bone as a hunting instrument to becoming an evolutionarily-advanced species capable of exploring the cosmos.

[image: Kubrick's "2001: A Space Odyssey"]

Innovation, from an evolutionary perspective

A picture, as they say, is worth a thousand words. This was the cover of the February 17 issue of The Economist: "The end of the cash era." With electronic payments and various forms of digital money on the rise, the era of coins and bills could be nearing an end: "Cash, after millennia as one of mankind's most versatile and enduring technologies, looks set over the next 15 years or so finally to melt away into an electronic stream of ones and zeros..."

What better way to approach this topic than from an evolutionary perspective? In this image, dinosaurs comprised of coins and pterodactyls comprised of dollar bill fragments are being showered by cosmic meteorites in the ultimate dinosaur doomsday scenario. In the background, the U.S. $20 bill stands lonely vigil over a decimated economic landscape.

[image: The Economist]

Innovation as a "transitional iteration"

In the current issue of New York Magazine, Kurt Andersen describes the changing dynamics of the media business, with a focus on how established media outlets like the New York Times and Washington Post are dealing with the explosion in popularity of online video. Should these mainstream media giants attempt to out-maneuver the likes of YouTube -- or should they just see where the process of Endless Innovation takes them?

"We think we know that the professional news media, especially newspapers, are obsolete, that the future is all about (excuse the expression) you—media created by amateurs. But such PowerPoint distillation tends to overlook the fact that mainstream media are not all simply shriveling and dying but in some instances actually evolving. And in evolution, there are always fascinating transitional iterations along the way. Such as newspapers’ suddenly proliferating forays into online video."

The imagery is fantastic - in a single phrase, Kurt coveys that evolution is a dynamic, recursive process that produces all kinds of interesting mutations along the way. These "transitional iterations" are tiny little incremental steps that are part of a much larger evolutionary picture.

[image: Evolution from ape to PC man]

Walt Mossberg: Go forth and make YouTube video clips!

Let's face it - deep down, you secretly long to create a popular YouTube video clip that you can brag about to your friends and colleagues. About two weeks ago in the Wall Street Journal, personal technology guru Walt Mossberg explained just how easy it is to make one of these clips: "Everyone can now be a video producer. YouTube and other Web sites are filled with short amateur videos created on typical home computers. Even print journalists like me have joined the trend..." With that in mind, Walt walked through the basic tools and process for creating Web-ready videos.

Inspired by Walt, I went out over the three-day holiday weekend and made a quick 4-minute video clip about my visit to the American Museum of Natural History in New York City. (A new exhibit called "The Hall of Human Origins" just re-opened to the public, and has been generating a bit of buzz in the local media). As much as I would like to think of this clip as worthy of the great masters of cinematography (Fellini, Antonioni and Basulto!), it's basically an amateur hack video edited with Windows MovieMaker software and a basic, run-of-the-mill laptop PC. Even with these rudimentary tools, I was able to put together an "Endless Innovation" video clip with an opening title sequence, closing production credits and soundtrack. (I like to think of it as a template for an upcoming "trailer" for the Endless Innovation blog and will be posting it a bit later this week.)